ASIA CREDIT CLOSE: More constructive tone for Asian credits

Thu Aug 21, 2014 5:22am EDT

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SINGAPORE, Aug 21 (IFR) - Asian credits nudged tighter as a more constructive tone took hold of Asian markets today. The iTraxx Asia IG Index narrowed 1bp from yesterday, with the bid-offer spread tightening to just 1bp to 100bp/101bp.

Asian equities were generally higher following overnight gains on Wall Street. The Nikkei ended up 0.8%, while Australian equities were slightly higher. However, stocks in China and Hong Kong fell on a weaker-than-expected PMI for August.

The HSBC flash PMI, an indicator of the health of the manufacturing sector, dropped to 50.3 in August from an 18-month high of 51.7 in July, pointing to a fragile recovery, though more easing measures can be expected to prop up the economy.

China's 5-year CDS eased 1bp to 72bp/74bp earlier in the day, but rebounded slightly to 71bp/73 late afternoon.

As for cash bonds, Chinese high-yield credits were surprisingly not affected and such paper was broadly unchanged from yesterday. KWG 2019s were quoted at 104.5/105.5, while Greenland 2017s were at 100.25/100.625.

The Yingde Gas deal, books for which are now being built in the market, had no effect on the secondary markets. "The deal is small and demand seems good since they have revised to a slightly tighter yield," said one high-yield trader.

As for other high-yield credits, Greenko 2019s were indicated at 98.25/99.25, still range bound from last week. GCX 2019s were faring better and still seeing strong bids with quotes at 103.5/104.5 - far above its reoffer at par.

Among the latest investment-grade issues, Shanghai Electric 2019s were holding up at 116bp/111bp, while CCB Asia's Tier 2 notes had widened slightly to 258bp/253bp from yesterday.

Kexim's 2019s were broadly unchanged from yesterday at 77bp/75bp.

kityin.boey@thomsonreuters.com

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